Profit dips as Polar Capital suffers £448m outflows

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London Stock Exchange. IPO. Mid-sized business.
Just 23 firms have listed in the UK in the first three quarters of this year.

Polar Capital has reported a drop in pre-tax profit following a “challenging” first half, but its assets under management (AUM) rose despite £448m net outflows. 

The figures 

The investment manager said its AUM hit £14.3bn as of 30 September, a 3.6 per cent increase on the £13.8bn it reported at the end of March. 

Polar said increase was driven by £915m market movement, currency and performance, but this was partially offset by the £448m of net outflows it suffered during the first half.

The company reported an 8.8 per cent drop in pre-tax profit, which fell to £24.9m from £27.3m a year earlier. 

Basic earnings per share for the six months to the end of September fell from 24.3p to 21.6p.

Polar announced an interim dividend per share of 8p.

Shares in the company fell over 2.5 per cent following the update. 

Why it’s interesting 

Chief executive Gavin Rochussen said that despite the net outflows, most Polar funds experienced net inflows in the first half. 

The merger of two of the group’s Japan funds combined with two large client withdrawals from its Global Technology Fund and Healthcare Opportunities Fund drove the net outflows, Polar said. 

Rochussen said the first half had been a challenging period for the group and the wider industry, as active equity outflows continue. 

Across the fund management sector, equity funds have experienced record quarterly outflows as cautious investors move to diversify their portfolios and shift funds into the perceived safe haven of bonds. 

What Polar Capital said

“The past six months have been challenging,” said Rochussen. “The ongoing uncertainty surrounding the UK’s relationship with Europe has led to a very polarised equity market.”

“Further afield, policy makers are working hard to support economic growth, but the outcome of trade talks and the implications of the US Presidential election are significant unknowns,” he added.

“Positioning and sentiment surveys remain cautious, with reported cash positions at high levels and equities underweight,” said Rochussen.